Latest news with #FrankSlootman
Yahoo
07-05-2025
- Business
- Yahoo
Snowflake Inc. (NYSE:SNOW): Offering Sustained Growth and Lucrative Returns
We came across a bullish thesis on Snowflake Inc. (NYSE:SNOW) on ValueInvestorsClub by Wells. In this article, we will summarize the bulls' thesis on SNOW. The company's shares were trading at $147.56 when this thesis was published, vs. the closing price of $158.96 on Apr 28. Is Nebius Group N.V. (NBIS) the Top Stock in Ken Griffin's Portfolio to Buy According to Analysts? Copyright: ralwel / 123RF Stock Photo SNOW provides a cloud-based data platform for various organizations in the United States and internationally. Its platform includes AI Data Cloud that enables enterprises to consolidate data for business insights, building data applications and solving business problems. The Database Management Systems market was worth $80 billion in 2023 with the cloud portion accounting for $47 billion and has been growing at 35% since 2019. This segment should grow to $100 billion by 2027, clocking a growth rate of +20%. SNOW offers products that target $75 billion of the market opportunity ($50 billion structured data and $25 billion unstructured data). SNOW has commanded a dominant position among enterprises due to less complexity, better security and cheaper solutions. While competition from players like Databricks has been mounting which challenges the dominant position of SNOW, there is no trend indicating a clear shift away from SNOW. The Y-o-Y quarterly growth has subsided from 100% in 2024 to 28% in Q4-24 and the net retention reduced from 178% to 126%. SNOW is looking to improve the latter by deploying customer representatives close to the clients, enabling them to identify new use cases. Realizing a 126% NRR should not be challenging amidst emerging database solutions since SNOW has historically resorted to acquisitions in a bid to catch up with the market. It should manage to pace itself with the industry growing annually at 24% backed by a growth of 28% in the product segment. Since the departure of Frank Slootman, the new CEO Sridhar Ramaswamy has been focusing on AI/ML products that are expected to provide meaningful contributions in the second half of 2025. Over 4k customers use one of these products, a 25% growth from the last quarter. While it is too early to comment on the durability of this growth, the management sounds confident and expects tailwinds from this niche to propel the revenue growth higher. Assuming a base case scenario of 24% revenue CAGR, 30% FCF margins and an FCF multiple of 35x, the fair value stands at $383, implying an IRR of 19%. In an upside case, SNOW should achieve a CAGR of 27%, commanding a valuation of $590 using an FCF multiple of 40x, thereby generating an IRR of 30%. While we acknowledge the potential of SNOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Globe and Mail
11-02-2025
- Business
- Globe and Mail
Alphabet Is Giving Up on Snowflake Stock. Should You?
With a market capitalization of $61.4 billion, Snowflake (SNOW) helps businesses derive meaningful insights from their data, build data-driven applications, and facilitate data sharing. It works with service partners who provide industry expertise and technical guidance to help customers maximize their data and AI initiatives using its platform. Founded in 2012, one of its main products is its Data Cloud. This platform enables organizations to consolidate, analyze, and share data from a single source. Moreover, Data Cloud operates across major cloud providers, including Amazon (AMZN), Microsoft (MSFT), and Google (GOOG), offering customers seamless integration and global accessibility. Snowflake went public in September 2020 and currently trades over 50% below all-time highs. Alphabet recently fully divested its stake in Snowflake, selling 114,554 shares in the fourth quarter of 2024. The exit marks the end of a position that began in early 2022, when the tech giant scooped up 535,604 Snowflake shares. Google significantly reduced its stake in Q3 2024 when it sold 421,050 Snowflake shares. Despite having a partnership with Snowflake, Alphabet's reasons for the complete exit remain unclear. While Snowflake faced challenges in 2024, including CEO Frank Slootman's retirement and a 22% stock decline, its shares have rebounded in 2025 with a 19% gain in the year to date. Is Snowflake Stock a Good Buy in 2025? In the third quarter of its fiscal 2025 (ended in October), Snowflake's product revenue was $900 million, up 29% year over year. The company continues strengthening its market position through enhanced AI capabilities, product innovation, and strategic partnerships. Under CEO Sridhar Ramaswamy's leadership, Snowflake is seeing significant adoption of its AI features. It has deployed 1,000 use cases and more than 3,200 accounts that utilize its AI and ML capabilities. The company recently announced a partnership with Anthropic to integrate advanced AI models through Snowflake Cortex AI. The collaboration should help enterprises develop cutting-edge AI applications with built-in security and governance. Snowflake's success is mainly due to its ease of use and cost-effectiveness. Large enterprises are choosing Snowflake as their data foundation. Further, customers who migrate from other providers have reported up to 50% in cost savings. Major brands such as Hyatt (H), NBC Universal, and Toyota (TM) also leverage Snowflake's platform for various applications, from personalizing guest experiences to managing streaming content recommendations. In the past four quarters, it has booked over $3.9 billion, a 68% increase from the previous period. Snowflake is also expanding its capabilities through strategic moves, including the planned acquisition of Datavolo, which will enhance its connectivity platform for both structured and unstructured data. Snowflake's financial performance remains strong. It ended fiscal Q3 with remaining performance obligations of $5.7 billion, showing 55% year-over-year growth. In Q3, it maintained a non-GAAP operating margin of 6% while continuing to invest in innovation and market expansion. Is Snowflake Stock Overvalued? Snowflake has increased its fiscal 2025 product revenue guidance to $3.43 billion, up 29% year over year. Comparatively, analysts expect sales to rise from $2.8 billion in 2024 to $5.5 billion in fiscal 2027. Its free cash flow is projected to expand from $813 million in 2024 to $1.5 billion in 2027. So, priced at 40.6x forward FCF, the tech stock commands a premium due to its stellar growth estimates. Out of the 42 analysts covering SNOW stock, 29 recommend 'Strong Buy,' three recommend 'Moderate Buy,' nine recommend 'Hold,' and one recommends 'Strong Sell.' The average target price for SNOW stock is $191.62, marginally higher than the current trading price.
